Low cost Stocks & Shares (Investment) ISAs: The Best Currently Available List!

Special_Saver2

No problem GTG, I am glad to see that you have made use of this thread.

Life is not quite so exciting on this thread compared to the cash ISA thread at the moment! All of the S&S ISA changes seem to have happened over the last few months.

There are no new special offers that I can see for any of the providers. I have just checked through the different providers and the only change that I can find is that JPJShare.com has reduced its telephone dealing fee to £7.50.

SS2

GTG

I've short listed two providers which are suitable for my needs i.e. I want to mainly swing trade US stocks and ETFs so I'm looking at x o and idealing.

In the case of the short listed brokers I need to find the list of stocks traded through the LSE International Retail Service (IRS), Crest Depositary Interests (CDIs) RSP Gateway, Euronext Paris and Chi-X Europe. If anyone can help me out with a link or two I'd appreciate it.

Thanks

samizdat

Just thought I should mention Saxo Wealth Management, a new platform from Saxo Bank that offers an ISA, a SIPP, and an ordinary taxable share trading account.

As I see it, the main attraction here is that there is Direct Market Access (order book trading), which up to now has only been available, within an ISA, at iDealing. (Interactive Brokers offers it, but does not offer an ISA, only a SIPP or taxable account. Saxo Bank's other platform (Saxo Trader) also offers it, but again no ISA.)

There is an annual fee of £35 for the Saxo Wealth Management ISA, which is waived if you already pay the same annual fee on the taxable share trading account.

Commissions are a flat £9.95 on UK share trades up to £75,000 in value.

I do not really recommend trading foreign shares in an ISA, because of the forced currency conversion on both purchase and sale, and the unfavourable spreads on FX charged by most (all?) who offer foreign dealing within ISAs, and Saxo Wealth Management is no exception, because although commissions are competitive (0.15% with a £9.95 minimum), there is a 1.5% foreign exchange loading. (Saxo Trader has only a 0.5% loading, making this a particularly annoying aspect of their fee structure.)

There is no exit fee, whereas iDealing charges £60 per account.

I haven't really looked into the funds side of things, but I see no mention of trail commission rebates, so I doubt it is a price leader in that area.

I am tempted by Saxo, because I'd really like DMA, partly just for fun, partly because of the horrendous experience of the RSP network just breaking down during the financial crisis, and partly because I dislike the lack of transparency in dealer spreads. I don't see how anyone can tell how much a trade is really costing them without taking into account the spread over the order book, and this is quite hard to do, especially without Level 2 pricing data.

I have always been put off iDealing by their exit fee. It's probably not that material in the grand scheme of things, but I just hate that kind of fee - a sting in the tail, and a reward for failure.

There is also something of a shoestring feel to the whole iDealing operation, which I know is true of many of the discount brokers mentioned here, but much less true of Saxo Bank. On the positive side, iDealing did resolve that ridiculous issue of only being able to withdraw money by asking for a cheque in the post. I see that they have now opened for business in France, so maybe they are trying to achieve a greater overall business size.

coastline

Sorry haven't read through the thread but I'd like to add something that might be usefull if it can be confirmed by an active share dealer on here...
Obviously people are looking closely at fees and dealing costs and the bit I'd like to point out relates to dealing charges...
Many will look straight at the cost of a transaction online....lets say its cheap at £6 a go...but whats not pointed out is how many market makers they are using to achieve your dealing quote...eg £2.50p for your share..
If a broker scans the market then he may get a keener price using several market makers...and you may end up with £2.49p.
So a deal of £6 at £2.50p might not be as cheap as £12 at £2.49p...
So to sum it all up.. it might pay to ask how many market makers your broker is using for your transaction....

samizdat

coastline wrote: »

So to sum it all up.. it might pay to ask how many market makers your broker is using for your transaction....

Or, as I was just saying in the previous post, go for Direct Market Access, and cut out the middle man.

GTG

samizdat wrote: »

Or, as I was just saying in the previous post, go for Direct Market Access, and cut out the middle man.

Great post above Sam (the longer of the two), are you sure it's DMA on the Saxo ISA? I don't recall seeing that on the video tour.

I imagine Interactive brokers or Tradestation Securities would be and ISA traders dream if they would set themselves up as a plan manager. IB were inundated with requests for a SIPP product and they eventually got around to introducing one. If they get frequent requests for an ISA product maybe they will get around to that as well. So anyone out there please email in your requests to both IB and TS and maybe it will come about.

Sam, I agree with you about the cost effectiveness of trading/investing in an ISA because of the spreads/lack of plan managers offering DMA and the restriction of not being able to hold foreign currency in ones account. They trap one into dealing on the LSE and paying stamp duty (in the case of stocks) and for most people expensive spreads. I have n't done any figure on the subject but if you take into account the savings in commission, spreads, stamp duty on LSE stocks and the opportunity cost of the lack of investment options in the global market place it may well be cheaper to pay tax in the long run. We all have an annual CGT allowance of about £11,500 I believe.

samizdat

GTG wrote: »

..are you sure it's DMA on the Saxo ISA? I don't recall seeing that on the video tour.

Yes. See http://www.modernwealthmanagement.co.uk/investment-products/shares under the heading "Investing in Shares with MWM". There is a direct statement about DMA.

GTG wrote: »

I imagine Interactive brokers or Tradestation Securities would be and ISA traders dream if they would set themselves up as a plan manager. IB were inundated with requests for a SIPP product and they eventually got around to introducing one. If they get frequent requests for an ISA product maybe they will get around to that as well. So anyone out there please email in your requests to both IB and TS and maybe it will come about.

I have personally lobbied Interactive Brokers to introduce ISAs, but they have told me they are really not going to do this in the forseeable future. Their response, in August 2011, was:
"Thank you for contacting us. Apologies for the long delay. At the moment, we do not have any immediate plans to offer ISAs. In fact, it's unclear if we will ever offer them. We have just recently dipped into the territory of offering SIPP accounts. Offering this new structure required a total overhaul to the way our system were built, which took several years of time, along with heavy costs and extra personnel. With that said, considering the demand for ISAs is significantly less than SIPPs, IB is not particularly keen on another years-long endeavour to overhaul to our systems, which is what would be needed to accommodate ISAs. We sincerely apologise, but IB has no plans to review addition of ISAs anytime in the next 2 years. Beyond that, in a few years, we will monitor the demand at that time. IB Help Desk"

GTG wrote: »

I have n't done any figure on the subject but if you take into account the savings in commission, spreads, stamp duty on LSE stocks and the opportunity cost of the lack of investment options in the global market place it may well be cheaper to pay tax in the long run. We all have an annual CGT allowance of about £11,500 I believe.

It is a valid concern, but remember that bonds (and bond funds) will be able to pay gross interest within an ISA, and a bond portfolio could be a natural way to invest in one's old age. Meanwhile, the additional costs of ISAs, when compared with taxable accounts, are quite low (commission and Stamp Duty are facts of life).

GTG

samizdat wrote: »

Yes. See http://www.modernwealthmanagement.co.uk/investment-products/shares under the heading "Investing in Shares with MWM". There is a direct statement about DMA.

Thanks for that.
EDIT: If you watch the video on your link the demonstration only shows buying with a limit order and DMA is not mentioned. On the ISA page DMA is also not mentioned so I've emailed them on the issue.

I have personally lobbied Interactive Brokers to introduce ISAs, but they have told me they are really not going to do this in the forseeable future. Their response, in August 2011, was:
"Thank you for contacting us. Apologies for the long delay. At the moment, we do not have any immediate plans to offer ISAs. In fact, it's unclear if we will ever offer them. We have just recently dipped into the territory of offering SIPP accounts. Offering this new structure required a total overhaul to the way our system were built, which took several years of time, along with heavy costs and extra personnel. With that said, considering the demand for ISAs is significantly less than SIPPs, IB is not particularly keen on another years-long endeavour to overhaul to our systems, which is what would be needed to accommodate ISAs. We sincerely apologise, but IB has no plans to review addition of ISAs anytime in the next 2 years. Beyond that, in a few years, we will monitor the demand at that time. IB Help Desk"

Thanks again for sharing, it surprises me that demand for ISA's is significantly less than SIPPs! The dialogue in a thread over at Trade2Win contradicts the statement that it took several years of their time to overhaul their system to accomodate for SIPPs. If I recall correctly a representative said that they had no plans to provide a SIPP product when asked a number of times over quite a few years. It was only the last few months before they launched SIPP accounts that they said they were working on same.

It is a valid concern, but remember that bonds (and bond funds) will be able to pay gross interest within an ISA, and a bond portfolio could be a natural way to invest in one's old age. Meanwhile, the additional costs of ISAs, when compared with taxable accounts, are quite low (commission and Stamp Duty are facts of life).

I should have said "uncompetitive" commissions and I forgot to mention that foreign currency is not allowed to be held in an ISA. So buying stocks on foreign exchanges to get around stamp duty is not viable when an FX loading of 1.25% - 1.5% is typical (which you mention above). Then of course there are the complications of reclaiming tax deducted at source (in the case of dividends) according to the rules of each country and whether there are double taxation arrangements in place. Good point with regard to bond interest and retirement.

I will probably retain the monies under my existing ISA tax shelter but I'm considering moving from Selftrade to either idealing or Saxo for their DMA. I'm moving towards an account with TS for an ordinary dealing account. Not as cost effective as IB but their charting package with all the bells and whistles is probably the best in this space.

samizdat

GTG wrote: »

I should have said "uncompetitive" commissions and I forgot to mention that foreign currency is not allowed to be held in an ISA. So buying stocks on foreign exchanges to get around stamp duty is not viable when an FX loading of 1.25% - 1.5% is typical (which you mention above). Then of course there are the complications of reclaiming tax deducted at source (in the case of dividends) according to the rules of each country and whether there are double taxation arrangements in place.

Yes, I see what you are saying: you can buy foreign shares to avoid Stamp Duty, but in an ISA you are clobbered by compulsory FX and poor FX spreads. Maybe we should lobby DC to allow foreign cash holdings in ISAs, at least temporarily pending reinvestment. LOL.

I'm baffled really why FX spreads are so high - surely it just means foreign share volumes are much smaller than they might be, which would not seem to be of benefit to anyone.

GTG

samizdat wrote: »

I'm baffled really why FX spreads are so high - surely it just means foreign share volumes are much smaller than they might be, which would not seem to be of benefit to anyone.

It's pretty much Hobson's choice an ISA... pay it or only trade domestic stocks. I suspect all the brokers get a kick back from the deal just as Selftrade do, see note 5 in International Trade. It could be that they know from marketing work that it would not be worth their while to introduce lower FX fees or they just have n't bothered their backsides to find out. I've come to the conclusion where ISA's and especially foreign stocks are concerned it really amounts to getting shafted from all angles. BTW, the customer service experience I have had with Selftrade has been absolutely attrocious, perhaps the worst on any product or service I've had in my life! Please do not ask... my blood is boiling just typing this out. Going off to cool down now.